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The Insurance Solution to Judicial Review on Planning Permission

Published: 16/07/12

Judicial Review is the legal process by which members of the public may challenge the lawfulness of a decision made by a Public Authority.

What this means is that there is a period of time (typically a six week or three month and 14 day period) during which planning permission can be challenged. Individuals can do this easily at very little cost via the Government’s Department of Justice website, which holds all the relevant information and forms - and if successful, planning permission can be set aside or quashed. This therefore presents considerable risks to developers of land.

Judicial Review Policy

Flint can offer property developers access to Judicial Review Insurance (JRI) which can help mitigate this type of loss. What it provides is cover for loss of market value on a specific development as a result of planning permission being challenged or quashed by Judicial Review. It also covers legal costs of defending a Judicial Review Challenge; the abortive costs of any works already carried out (or contracted to be carried out) as well as a variety of delay costs and consequential losses in the event that an interim injunction is granted.

Property development can be very risky business, with timing being crucial to success. Holding a consented site for a further three months whilst waiting for a possible Judicial Review may not be an option. JRI can enable a developer to commence work on a site as soon as planning is granted, help create financial certainty, reduce risk and enable key delivery targets to be met. JRI can also be essential for bank funding and investment.

The following example shows that it’s not just the huge £million developments that carry risks.

The purchasers agreed to buy a development opportunity for £400,000. The purchase was conditional on the purchasers obtaining planning permission to convert the house into two flats and to erect a second house on the property. On grant of planning permission, the purchase was completed in accordance with the contract.

In an unforeseen development, the neighbours responded to the grant of the planning permission by applying for Judicial Review. This resulted in the court quashing the planning permission, loss of the ability to proceed with the planned development and, consequently, significant devaluation of the property. Furthermore, the purchaser was ordered to pay court costs of £135,000, after losing a claim for negligence against their solicitor.

If you are involved in any property development that has the potential to be subject to Judicial Review please contact Tony Cracroft for information on how this cover can support the project. Call Tony on 0845 371 1452 or email tonycracroft@flintinsurance.co.uk